Laissez faire is an economic environment where transactions between private parties are free from any government intervention, whether it is via restrictions, enforced monopolies or tariffs. It is considered to be an extreme belief in the free market and is supported by some classical liberalists. This economic liberalism was supported by Adam Smith, who wrote the 'wealth of nations', and it was argued that Smith never saw the limitations of laissez faire, drawing heavily on liberal, ration assumptions on human nature. The idea of the 'invisible hand' is used to explain his idea of how economic problems such as unemployment and inflation are removed as a result of the mechanisms of the market. A free market can lead to economic efficiency, for each firm is egotistical and therefore wishes to achieve its maximum potential. for this reason, free market economics, as advocated by Adam Smith, is inherently associated with classical liberalism.
This argument of 'self regulation' with in the free market therefore links free market economics to social Darwinism. Classical liberalism has a harsh approach to poverty and social inequality. Samuel Smiles explains how 'heaven helps those who help themselves', promoting social Darwinism, which believes in the 'survival of the fittest'. The concept of the individual who strives the most achieves the most is innately linked to free market economics, for in a free market economy everybody is egotistical, and this self-interested campaign for wealth results in the economy flourishing and self-regulating. The idea that 'the drunkard in the gutter is exactly where he ought to be' (William Sumner) explains how, as a result of the 'natural selection' process, some succeed and others don't. This concept clearly supports the idea of humans being self-interested, egotistical individuals, thus demonstrating how free market economics and classical liberalism are associated.
Free market economics is also supported by the concept of free trade. David Ricardo focused on 'comparative advantage', which was viewed as a fundamental argument in favour of free trade. This concept takes the belief that each country gains by specialising in the good in which it enjoys a comparative advantage, and trading that is good for the other. He sees this as a fundamental argument for free marker economics, because the individual is self interested and by having the freedom to produce their ow specialised product, they can become the wealthiest, demonstrating how free market economics and classical liberalism is linked.
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